Incentives are hitting historical highs as office landlords attempt to pull in ­tenants from a thinning market.

Commercial agency CBRE has posted a grim outlook for commercial property for the next decade just days after the election of the Coalition ­government sparked hopes of a ­turnaround in business sentiment.

With no distinct drivers of activity in the non-mining sector, things were expected “to worsen before they improve", CBRE said in its analysis of second-quarter transactions.

Challenging business conditions and a weak labour market constrained demand and led to historically low national new absorption, it said.

Absorption is an industry term describing the amount of additional space taken up by new tenants. It can be a useful barometer for how much new development is needed in the market.

CBRE forecasts national CBD net absorption over the next decade to be, on average, 15 per cent lower than over the past decade.

“We expect further declines in the contribution from the mining sector and continued space consolidation strategies in the public sector," senior researcher Claire Cupitt said.

Instead, an increase in business ­services – driven by population growth – will help fill office space in the next decade.

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Rental incentives have reached a ­16-year high in Melbourne, at about 30 per cent. In Sydney, they will hit 32 per cent by the end of the year and in Brisbane, they are forecast to surge past 30 per cent, according to CBRE.

There is still considerable investor appetite for core office property, with $2.8 billion in major deals across the country in the second quarter. But the pressure on investment yields over the past 12 months is expected to ease in the face of increasing incentives and a weaker rental growth outlook.

“We forecast a further tightening in prime cap rates in both the Sydney and Melbourne CBDs over the remainder of the year," Ms Cupitt said.

“However, through 2014 and 2015, we expect the balance of this tightening will unwind as the full impact of a weaker economy is felt.

“This should see average Australian CBD prime office yields move closer to their long-run average."